The implications of empirical and 1:1 substitution ratios for consequential LCA: using a 1% tax on whole milk as an illustrative example

View/Open

Date

Author

Metadata

Abstract

Purpose There is an apparent convention within both consequential
and attributional life cycle assessment (LCA) to assume
a 1:1 substitution ratio between functionally equivalent
product systems. However, this convention may not be compatible
with the purpose of consequential LCA, which is to
model the actual consequences of the decision at hand. This
paper explores the implications of the convention using the
illustrative example of a 1 % tax on whole milk.
Methods A consequential LCAwhich assumes a 1:1 substitution
ratio between two functionally equivalent product systems
is compared with the results of an analysis that estimates
the actual substitution ratio based on empirical data. Crossprice
elasticities of demand for possible competitor products
are modelled using a linear approximated almost ideal demand
system (LA-AIDS).
Results and discussion The results show a 1:0.52 substitution
ratio between whole and low fat milk, rather than a 1:1 substitution
ratio. Depending on the consequential LCA values
for whole and low fat milk, the 1:1 convention could underestimate
the greenhouse gas emission reductions from the tax
by over 400 %.
Conclusions The results suggest that it is highly important to
model actual substitution ratios between competing product
systems in order to capture the consequences of the decision at
hand. As a subsidiary contribution, the paper also shows the
importance of modelling the displacement effects of milk fat
co-products, which are generally not considered in the
existing LCA literature on milk.